Northpointe Bancshares, Inc. Reports First Quarter 2025 Results

GRAND RAPIDS, Mich.--(BUSINESS WIRE)--April 22, 2025-- 

Northpointe Bancshares, Inc. $(NPB)$ ("Northpointe" or the "Company"), holding company for Northpointe Bank, today reported net income to common stockholders of $15.0 million, or $0.49 per diluted share, for the first quarter of 2025. This compares to $8.8 million, or $0.34 per diluted share, for the fourth quarter of 2024, and $9.8 million, or $0.38 per diluted share, for the first quarter of 2024.

"We completed our initial public offering on February 13, 2025, which allowed us to build upon our success and continue to cultivate strong organic growth and improved financial performance," remarked Chuck Williams, Chairman and Chief Executive Officer. "Northpointe's strong performance in the first quarter reflects the success of our differentiated and mortgage-focused business model, highlighted by $1.1 billion in MPP balance growth over the past year. We continue to focus on doing the little things and meeting our customers' needs, which we believe will translate into enhanced operating leverage and strong shareholder returns over time."

First Quarter 2025 Highlights (Compared to Fourth Quarter 2024)

   -- Net income to common stockholders of $15.0 million, up $6.2 million, or 
      70%, from the prior quarter. 
 
   -- Delivered significant improvement in financial performance from the prior 
      quarter, including: 
 
          -- Return on average assets of 1.31%, compared to 0.82% in the prior 
             quarter. 
 
          -- Return on average equity of 13.17%, compared to 9.40% in the prior 
             quarter. 
 
          -- Return on average tangible common equity of 14.32%, compared to 
             9.80% in the prior quarter (see non-GAAP reconciliation). 
 
          -- Efficiency ratio of 55.15%, compared to 67.46% in prior quarter. 
 
   -- Net interest income increased by $366,000 from the prior quarter, as the 
      8 bps expansion in net interest margin was partially offset by a slight 
      decrease in average interest-earning assets. 
 
   -- Non-interest income increased by $9.3 million from the prior quarter, as 
      the increase in net gain on sale of loans was partially offset by lower 
      loan servicing fees. 
 
   -- Non-interest expense decreased slightly from the prior quarter due to 
      lower overall expenses, partially offset by higher incentive compensation 
      within salaries and benefits related to the initial public offering 
      ("IPO") and an improvement in net income relative to prior periods. 
 
   -- Loans held for investment increased by $719.4 million, or 65% annualized, 
      from the prior quarter, reflecting a $757.4 million linked quarter 
      increase in Mortgage Purchase Program ("MPP") loans and a $31.1 million 
      increase in first-lien home equity lines which are tied seamlessly to a 
      demand deposit sweep account through our proprietary technology (we 
      commonly refer to these loans as "All-in-One" or "AIO" loans). 
 
   -- Total deposits increased by $400.1 million, or 47% annualized, from the 
      prior quarter from a combination of higher brokered certificates of 
      deposits ("CDs") and growth in the digital deposit banking platform. 
 
   -- Wholesale funding ratio increased slightly to 66.59% from 65.75% in the 
      prior quarter. 
 
   -- Completed IPO on February 13, 2025, issuing 10,420,000 shares of stock, 
      with net proceeds to the Company of $114.4 million. The Company's stock 
      began trading on the New York Stock Exchange under the ticker symbol 
      "NPB" on February 14, 2025. 
 
   -- The Company's Board of Directors declared a regular quarterly cash 
      dividend of $0.025 per share, payable on May 2, 2025 to shareholders of 
      record as of April 15, 2025. 

Net Interest Income

Net interest income was $30.4 million for the first quarter of 2025, an increase of $366,000 compared to the fourth quarter of 2024. The linked quarter increase reflects an improvement in net interest margin and a slight decrease in average interest-earning assets. As compared to the first quarter of 2024, net interest income increased by $3.2 million, driven primarily by an increase in average interest-earning assets, partially offset by a decrease in net interest margin.

Net interest margin was 2.35% for the first quarter of 2025, reflecting a 8 basis point increase over the fourth quarter of 2024 level of 2.27%. This increase was driven primarily by lower overall funding costs and a slight improvement in the mix of interest-earning assets. The rate on interest-bearing liabilities decreased by 22 bps from the prior quarter, reflecting a reduction in the federal funds rate and lower average balances of time deposits. As compared to the first quarter of 2024, net interest margin decreased by 3 bps, as the decrease in the yield earned on interest-earning assets outpaced the decrease in the rate paid on interest-bearing liabilities.

Average interest-earning assets decreased slightly from the prior quarter, as the growth in period ending loans held for investment occurred later in the first quarter. As compared to the first quarter of 2024, average interest-earning assets increased by $641.3 million, reflecting strong growth in loans.

Provision for Credit Losses

The Company recorded a provision for credit losses of $1.3 million in the first quarter of 2025, compared to a benefit of $446,000 in the fourth quarter of 2024 and a benefit of $357,000 in the first quarter of 2024. The provision for credit losses in the first quarter of 2025 reflects continued growth in the portfolio, reserve increases on individually evaluated loans, credit migration trends, and changes in the economic forecasts used in the credit models.

Non-interest Income

Non-interest income was $22.9 million for the first quarter of 2025, an increase of $9.3 million compared to the fourth quarter of 2024 and an increase of $6.2 million compared to the first quarter of 2024. The increase for both compared periods was driven primarily by higher gain on sale of loans, partially offset by lower loan servicing fees.

MPP fees were $1.1 million for the first quarter of 2025, a decrease of $453,000 compared to the fourth quarter of 2024 but an increase of $196,000 compared to the first quarter of 2024. The linked quarter decrease was driven primarily by lower participation fees as the Company participated out less of its loan balances during the first quarter of 2025. The increase compared to the first quarter of 2024 reflected higher balances in the MPP portfolio.

Loan servicing fees were $1.0 million for the first quarter of 2025, a decrease of $1.9 million compared to the fourth quarter of 2024. This decrease was driven primarily by the decline in fair value of mortgage servicing rights ("MSRs") primarily attributable to lower market interest rates during the current quarter. As compared to the first quarter of 2024, loan servicing fees decreased by $2.9 million, due largely to a bulk sale of MSRs completed in the first quarter of 2024.

Net gain on sale of loans was $18.6 million for the first quarter of 2025, an increase of $11.6 million compared to the fourth quarter of 2024 and an increase of $7.2 million compared to the first quarter of 2024. Net gain on sale of loans includes the capitalization of new MSRs, changes in fair value of loans, and gains on the sale of loans. On a linked quarter basis, capitalization of new MSRs and gains on the sale of loans decreased by $1.2 million and $2.7 million, respectively, consistent with the 19% linked quarter decrease in total residential mortgage originations. On a linked quarter basis, the change in fair value of loans increased by $15.4 million attributable to lower market interest rates. As compared to the first quarter of 2024, the increase in net gain on sale of loans was driven primarily by an increase in the fair value of loans attributable to lower market interest rates.

Other non-interest income was $2.0 million for the first quarter of 2025, and included a gain of $2.0 million from the extinguishment of lower-rate Federal Home Loan Bank ("FHLB") borrowings as part of the Company's strategy to reduce its wholesale funding ratio. This compares to other non-interest income of $1.7 million for the fourth quarter of 2024, which included a gain of $1.7 million from the extinguishment of lower-rate FHLB borrowings. Other non-interest income was negligible in the first quarter of 2024.

Non-interest Expense

Total non-interest expense was $29.4 million for the first quarter of 2025, a slight decrease compared to the fourth quarter 2024 level. This decrease was driven primarily by lower overall expense across the Company, partially offset by higher salaries and benefits expense. As compared to the first quarter of 2024, non-interest expense increased by $1.4 million, driven primarily by higher salaries and benefits expense.

Salaries and benefits expense was $20.4 million for the first quarter of 2025, an increase of $1.5 million compared to the fourth quarter of 2024. This increase was driven primarily by higher bonus and incentive compensation attributable to the IPO and the improvement in net income for the first quarter of 2025, along with higher employee benefits due to the seasonal timing of payroll taxes. This was partially offset by a decrease in the Company's base salaries and other compensation, reflecting severance expenses in the fourth quarter of 2024 related to the Company's strategic initiative to private label outsource its non-specialized mortgage servicing to a scaled sub-servicer. Additionally, variable compensation on mortgage production decreased by 9% on a linked quarter basis, consistent with the decrease in mortgage origination volume over the same period. As compared to the first quarter of 2024, salaries and benefits expense increased by $2.4 million, driven primarily by higher bonus and incentive compensation, partially offset by a decrease in the

(MORE TO FOLLOW) Dow Jones Newswires

April 22, 2025 17:00 ET (21:00 GMT)